Disclosure: I am not a Financial Planner.  I do give you my own beliefs and my personal experience results and do not intend to give you Financial Advise or counsel!. Please use a Financial Planner for that purpose. There is Risks involved in Investing talk it over with an expert before acting.

Over the life of your mortgage or for 30 years the home you bought at $135,000 will cost you $405,000 making just the regular payment for 360 months!. The extra $270,000 will be interest for your bank that lend you the money at 4.875 %. The interest sounds small 4.875% but due to compounding effect it gets to be very high and ridiculous amount of money!

To avoid all that additional payment in interest to the mortgage company I am going to show you 2 Tools to Accelerate your Mortgage Payment I will call them Turbo #1 and Turbo #2. It is very common for cars to have 1 turbo or 2 Turbos now a days and cars go from 0 to 60 in less than 6 secs so just to have reader follow up better I have created these tool metaphors to Accelerate your Mortgage Repayment called Turbo #1 and Turbo #2.

Turbo #1: Let's say you got a Retirement plan sponsored from your employer. You know the one that matches up to 6% in some cases and you have been contributing to the plan faithfully every time you get a pay stub and through a lot of sacrifice you have accumulated $$$. For the purpose of these example let us think it is at $58,000 balance. You know the stock market is very high some experts said due for a correction and you can use your own money to help yourself. This will be "Tax Free event" with no penalty unless you do not repay the amount you got in the loan from your Retirement account.

Turbo #2: You have received a credit card offer via mail at your home or email at a 0% interest for the first 12 months on purchases with a credit line of $14,000 or similar quantity.

For a practical purpose Let's use an example that you have bought a home for $135,000(Quantities will vary according to your mortgage loan terms) and after several payments many years at a 4.875% interest your balance is $103,848 and your mortgage monthly payment is $991.00 that includes Principal, Interest, Taxes and Insurance. If you review carefully your Mortgage Statement from last month you might notice the following:

1) The last month mortgage payment you made for $991.00 lowered your Principal by $154 approx only per month and the interest for your bank was $414 dollars approx for that month. Translated per year you paid $11,892 total and out of that paid $1,848 towards the principal and $4,968 towards your bank as interest the rest were just taxes and insurance.

2) If every year after sending my $11,882 You lower your balance $1,848 it is going to take several years to pay it off....

Now lets say you want to pay your mortgage off using the Accelerated way......Using Turbo #1 you will need to call your Retirement plan and tell them you want to borrow money out of it. Most plans allow a 50% max borrow amount so out of the $58,000 you can get $29,000 cash. Note since you are borrowing from your own money in your retirement plan at 6% for 5 years your employer is going to deduct approx $268 from your paycheck but this money will go straight back to your Retirement plan including the interest you will pay at the 6% rate as well.....Let's see what will happen after you send the $29,000 to the mortgage company as follows:

Monthly payment $991                           Your Balance with the Mortgage was a $103,848

Additional Principal $28,009                     From your regular payment                  - $ 154

Total Payment sent $29,000                    Additional Principal sent                       -$28,009

                                                            Your New Loan Balance is $ 75,685

On your next statement out of the $991 monthly payment you will notice something wonderful! ....Your Principal amount will be higher than $154 at $ 197 approx and interest will get lower from $414 to $301 approx (you have cut the Mortgage Company income by 28% in interest they use to get).

Now lets apply the Turbo #2: Using your new credit card at 0% interest for 12 month you will use it as follows You go to the groceries the whole month and charge everything on the card $700, You pay your internet and cable $150, your phone bill $200, your gas for your car $160, your hair cut $120, Your other bills too and for illustration let's say the total amount you charged and that you are going to send as additional principal = $1,330.... I am not telling you to travel to Europe and spend $12,000 on a vacation and charge the credit card...this is only for the regular payments that you do without luxury/vacation in mind.

Your next payment to your mortgage will be as follows:

Regular payment       $991.00

Additional Principal $ 1,330.00 (This is the money charged to the credit card at 0% interest for 12 months)

You will continue do these charges to your credit card until you feel it is right or up to 6 months max recommended if you do not feel comfortable with 6 months do less months ideally 2 or more. (Remember to pay the minimum balance every month) so in this example let's say you did  6 month time you would have paid $1,330 x 6= $7,980 towards the principal reducing your balance from the $75,685 left as follows:

Balance $75,685 -Additional Principal ($1,330x6)- New Principal payment from $991 ($197x6)= Your new balance will be $66,523 approx after 6 month of charges to your credit card. In other words in 6 months you have reduced (using Turbo #1 and Turbo#2 ) your mortgage from $103,848 to $ 66,523 That is Excellent!.

During Months 7 to 12 you are going to:

1) Pay the minimum mortgage payment of $991

2) Re-pay credit card as much as you can monthly with your left over income and your goal is to pay the $7,980 you charged during the previous 6 months to avoid paying any interest(Find out how many months work for you even if you do only 2 months you will have paid (1,330 x 2 = $2,660) in addition to the original $1,848 you used to do prior to applying Turbo #1 and Turbo #2. Always remember you are in command!!!

Next: After the 12 months have passed and you brought the credit card balance back to Zero "Get another Credit Card at 0% and do the process again!".

Take care of your credit and be wise with your money! It is not how much you made only... it is more on how much you get to keep out of what you made!.

Sincerely,

Eduardo Polack Realtor